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June, 25, 2016

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China auto sales rise but local brands weaken

BEIJING -- China's auto sales rose 11.3 percent in the first two months of this year but local brands suffered a decline in a sign of intense competition in the world's biggest auto market, an industry group reported Monday.

Sales for the two-month period totaled 3.1 million vehicles, according to the China Association of Automobile Manufacturers. Sales by domestic auto brands declined 1 percent to 1.2 million vehicles.

Sales data from January and February often are combined to screen out the impact of the Lunar New Year holiday, which falls at different times in those two months each year.

Overall, sales are "better than early expectations," said Zhang Xin, an analyst at Guotai Jun'an Securities in Beijing.

Global automakers are spending heavily to develop models for Chinese tastes. That is squeezing fledgling domestic brands that lag in technology as buyers who used to see them as entry-level purchases demand better quality.

"Now, customers might ignore the transition part and go directly to buying better cars," said Zhang. "And they might have problems with selling the old Chinese-brand cars when they want to update."

Rapid overall sales growth has been steadily declining due to China's economic slowdown and curbs on ownership imposed in some cities in response to smog and traffic.

This year's sales growth is forecast to decelerate from 15.7 percent in 2013 to about 8 to 10 percent. Sales grew 17 percent in December.

Auto sales in February rose 29 percent to 1.3 million vehicles, offsetting January's lackluster 7 percent expansion before the holiday.

Total vehicle sales, including trucks and buses, rose 10.7 percent in the January-February period to 3.7 million, according to CAAM.

Earlier, General Motors Co. said sales of GM-brand vehicles by the company and its Chinese partners rose 19.9 percent in February over a year earlier to a monthly record of 257,770. Ford Motor Co. said combined sales in January and February rose 73 percent to 128,882 while February sales rose 67 percent to 73,040.

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